What Are Some Ethical Dilemmas In Financial Accounting

Improved Essays
Case 11.1: Accounting/Finance Ethics Scenarios
Main Ethical Issue(s)
Financial professionals are often confronted with fiduciary issues which challenge their integrity, honesty, and ability to be transparent with stockholders and customers. They may be pressured to make decisions or participate in accounting practices that are clearly against company policy, financial or accounting rules, regulations, and code of ethics. In all three scenarios, employees are asked to make such decisions.
Concepts and Theories Relevant to Case Economics and the bottom line are often the driving force behind decisions that are made within the organization. In an effort to make the bottom line appear better than it might actually be, finance and accounting employees
…show more content…
Financial professionals have the responsibility to conduct themselves with integrity and honesty and exercise professional and moral judgement that serves clients, employers, and the public. Furthermore, there are professional, ethical, and legal standards with which they are to utilize when making financial and accounting decisions. Greed or fear of losing clients or their job often motivates financial professionals to make decisions that conflict with ethical finance or accounting practices. In all three scenarios, the employees failed to make decisions that uphold these moral and professional standards.
Case 11.2: Marketing High Energy
Main Ethical Issue(s) The energy drink industry is being scrutinized for claims they make regarding the benefits and ingredients of their energy drinks and their marketing practices, especially those geared to children and teens. Ethical issues surround product safety and promotion.
Concepts and Theories Relevant to Case Marketing involves all aspects of creating, producing, pricing, and promoting a product (Johnson, 2016). The energy drink industry as a whole seems to operate closer to the caveat emptor continuum then the caveat venditor with the attitude that if it is legal, then it is also ethical (Johnson,
…show more content…
In layman’s terms it’s about doing things today that don’t make tomorrow worse” (Green, 2010, p. 1). Altruism and concern for others even if we do not profit from it is foundational for sustainability. When an organization makes decisions that do not necessarily improve their bottom line, but chooses to engage in practices of sustainability, this positively impact the well-being of future generations. For organizations to truly act in a sustainable or responsible manner they must incorporate the CSR pyramid of economic, legal, and ethical responsibilities into their mission, vision, goals, and daily processes and procedures. It must become an integral part of the way they conduct

Related Documents

  • Improved Essays

    The factors include the auditor’s certification role in the capital markets. Auditors certify the financial statements and reports issued by corporations when prepared according to GAAP and their industry specific statutory requirements. Auditors are required to maintain an attitude of skepticism in both the objective and subjective factors presented by the management in support of their formulation of accounting estimates. Surprisingly, even when the management team is composed of competent and reliable personnel, there is always a possibility of biases, in particular, for personal gain. As a result, the auditors ensure that they determine the reasonability and integrity of the management team during review of their assumptions and validation of accounting estimates.…

    • 997 Words
    • 4 Pages
    Improved Essays
  • Superior Essays

    Accountants who are biased may do unethical decisions while auditing a client. There are three aspects to influence the professional accountants’ judgement. Firstly, accountants may understand various information in different ways due to the ambiguity bias and therefore they form self-serving conclusions. Furthermore, professional accountants do not want to lose their clients and thus are strived that the audit has a positive outcome for the client. The auditors career would be on the line, even if working for a big enough company which could cope with the loss of a client.…

    • 1391 Words
    • 6 Pages
    Superior Essays
  • Superior Essays

    Organizations are heavily dependent on accounting ethics. Investors, creditors and managers cannot trust the financial data’s accuracy unless they are confident that the financial accounting practices of the accountants responsible are straightforward, honest, reliable in harmony with the industry standards. If accounting ethics and is not maintained, investors and creditors might be susceptible to…

    • 970 Words
    • 4 Pages
    Superior Essays
  • Improved Essays

    The third parties therefore rely on the independence of auditors in assessment. It is evident that the public confidence on public on entities and financial markets parts depends on the credibility of the audit reports availed by the auditors. In situations whereby the independence of auditors is compromised, the financial statements lack credibility, objectivity, integrity and the confidence of both the public and third parties who intend to use the audit report. Ensuring auditor independence therefore plays a crucial role in validating financial statements in both the public and private sectors thereby the need for acting…

    • 769 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Ethics In Accounting Essay

    • 1166 Words
    • 5 Pages

    Accountant should handle confidential data with care and had to make careful decision whether to disclose the information or not. A lot of damage can be done by letting out information such as about a firm or an individual financial situations or decisions, prospective client or employer, hence, reasonable steps to ensure that accountant are respectable and trusted to handle these information with control. The confidentiality principle protects a business from its competitors, supports a company’s efforts to maintain the company’s competitive advantages and prevents the invasion of the company’s privacy. People need to have confidence with the accountant, failing to do so will lead to…

    • 1166 Words
    • 5 Pages
    Improved Essays
  • Improved Essays

    Auditors are therefore required to feature professional skepticism as it ensures due alertness to the processes at the company hence avoid cases of fraud. Red Flags of Fraud The auditor will follow given steps in order to establish whether or not there is a case of fraud in the operations. The auditor will look for the red flags, which are indications in the event that there is a case of fraud within any given organization. The red flags that the auditor will look for are Managements ' characteristics and influence • Financial actions that are noticeably aggressive by the management • Flaws in the characters and personality of the top management officials such as the CEO • Efforts by management to conceal given financial…

    • 1728 Words
    • 7 Pages
    Improved Essays
  • Improved Essays

    A Case Study Analysis of the Ethical Implications to Stakeholders from Managerial Decisions Using the Three Managerial Ethical Decision Models. Managers experience situations on a frequent basis that require them to make ethical and moral decisions. An ethical decision can be defined as a decision that is both legal and morally acceptable to the wider community while an unethical decision is either illegal or simply morally unacceptable to the wider community (Jones, 1991). Ethical decisions can be explained and justified by the three ethical decision making approaches known as; utilitarian, moral rights, and the justice model (Waddell, Jones, and George, 2012.). In This case study a manager working in a large corporation…

    • 1494 Words
    • 6 Pages
    Improved Essays
  • Improved Essays

    One section of the Act, Section 302, it clearly states that the CEO and CFO must review the financial reports and ensure that the figures and accounting principles are correct and efficient (Johnson, 2009). This section makes the appropriate people truly look at the company numbers and sign off on them before they are sent to the company’s investors. If the CEO and/ or the CFO review the documents and notice that there are accounting errors and refuse to make the changes, then they are as much as fault as the people who committed the error. If accounting errors go unnoticed and the top management approves them, then they could be charges with serious penalties which are outlined in Section 906. Section 302 of the Act ensures that the right people will review the documents and identify areas of concern before the investors and stockholders receive the…

    • 1303 Words
    • 6 Pages
    Improved Essays
  • Improved Essays

    However, SEC would find reasons in awkward situations considering KPMG and why they shouldn’t have had been in the RTA meeting consulted by Haliburton. KPMG’s profession and influence can impact the way that the shareholders’ opinion can react up at the end. The firm’s actions related towards the ethical expectations would lead those accounting individuals which were part of the audit meeting to have a violation with the relationship between their clients. Halliburton let the whole policy of revenue recognition against GAAP slip through time. This accounting profession would alert many professional CPAs.…

    • 908 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    “Ethics in Accounting” Company’s today depend on their accounting department. It is very important that the company have Ethics in place from the President down to the janitor. It is a known fact that when you have a company that does not implement Ethics within the company and in every department, you will have issues that can lead to legal battles. I find that companies rely too much on their accounting department heads without really being a part of what they are doing. You hear on the news everyday about companies that have gone under because of embezzlement by the accounting person and also how the companies own CEO’s and President’s manipulate the numbers to benefit themselves, which of course hurt’s their stockholders, employees,…

    • 732 Words
    • 3 Pages
    Improved Essays